Security Deposit & Insurance excess

[Michela53]

We recently changed our rental property from permanent to holiday rental. Hosting is new to us, and although we’ve only had three bookings with Airbnb so far, we’ve had nine with Stayz. We contacted our insurance company NRMA to advise that our home is now a holiday rental (via Airbnb & Stayz). To provide us with appropriate cover they cancelled our landlord insurance and replaced it with Home & Contents. 

Our listings require that our Airbnb & Stayz guests pay a security deposit of $300 which is designed to cover small damages or theft or the insurance excess should there need to be a larger claim. 

We feel confident with Stayz as the guest is required to pay a refundable security deposit, this deposit remains with Stayz, & Stayz will refund the guest once the host instructs them to do so. Up until recently I was under the impression that a security deposit wasn't necessary with Airbnb as they provide hosts with some cover. However, after reading the many threads from the community board, I noticed that a lot of hosts are having trouble making a claim. In particular I noted that a host claimed for damaged bench-tops with from a hot pan and Airbnb offered her $25? Our bench-tops would cost well over $2000 to replace. This is alarming, because as I understood it, she charged a security deposit.

Am I correct in understanding that Airbnb guests do not actually pay a security deposit upfront? 

If not, then how is it a security deposit?

Our listing requires a security deposit, in the event of substantial damage whereby I will need to make a claim through my insurance, am I able to request that Airbnb release the $300 security deposit to pay for the insurance excess, which is $300? 

I would really appreciate some direction, because after reading so many terrible stories I am seriously considering closing down our Airbnb account because as a host I’m not sure I feel adequately covered/protected from theft or damage. 

[David126]

Basically it is a hold against a credit card and ABB adjudicate what will be paid and how much. You can read the details on the ABB site.

I assume you now have Landord Insurance, I am certainly not familiar with the Australian Insurance market but in general terms the extent of cover available to home owners is wider than that to landlords and of course any Insurance policy is limited in what it covers. Make too many claims and you will not have insurance.

On an ever more limited basis is the cover provided by AirBnB.

AirBnB was set up for home sharing and has evolved, now to what extent it meets the needs of those who rent out stand alone properties, only you can decide.

[Michela53]

Thanks David, my reply should have been addressed to you and Lisa. I appreciate your input. In Australia, landlord insurance does not cover holiday rentals, but we found a policy with our local insurer that does. We're happy with them and have maintained our insurance policies with them for both for our home and rental properties for 20+ years. I'm familiar with how policies work, inclusions, exclusion etc. Anyway, I covered this in the reply. Thank you again, this community alone is an incentive to stay, but I've decided that for now anyway, Stayz as a local (Australian) site provides us with the bulk of bookings, and despite the appealing Airbnb profile, it doesn’t meet our needs.

[Lisa293]

Our experience has been that the guest has to approve the payment to you.  If they decline and say the damage was there when they arrived or missing items were never there, you do not get paid.  I think some hosts have successfully made a claim with a police report but you are right, the security deposit is not something that you have any control over especially when you have to get permission from the guest to get a payout and the resolution is 100% dependant on their word.

Some people write on their listing that they will be taking a credit card swipe on arrival, which you could say was to meet your insurance requirements.  However, this is against the rules so do not be suprised if you can't enforce it or are asked to remove it from the listing.  We did this for 2 years before a guest complained and never had to take $1 for damages.    

You need to decide if you are prepared to pay the $300 deductable yourself and cover the cost of small damages and small thefts.  You will feel very liberated if you are prepared not to count on any support from airbnb.  After we were refused payout by a guest on a genuine claim for a substantial amount, they told me to factor these things into the price which is what we have done.  Make your price on airbnb a bit higher to compensate for this and if guests do a google search on the property they may book with the site that has the lower list price.

Hope that helps...

[Michela53]

Thanks Lisa, I'm starting to develop a better sense of Airbnb. Becoming a host sounded simple, within minutes you're up & potentially earning an income. The convincing marketing…'Don't worry, because we've got you covered' lulled me into a false sense of security; despite having 20+ years experience with home & landlord insurance.

I was anxious to talk to someone & alarm bells began to ring when I couldn’t find an email or phone contact for Airbnb. After a week of searching I found the community board. Thank you to all that posted the contact details.

Except for the many hosts that maintain exceptionally high standards, & terrific guests, I was surprised to find host after host desperately looking for Airbnb’s contact details and hosts distraught over damage & theft. But I was really shocked to find that the general consensus is that hosts should leave negative feedback, cut their losses & move on.

WOW! These comments paint a very different picture to, ‘we’ve got you covered’ marketing. Unless a guest agrees to pay up, the only recourse is that a bad review will make another booking through Airbnb difficult? Little consolation for the host left with the damage or major cleaning bill. I imagine that like many other hosts, we’re not a business with a large cash flow & tax incentives where costs can be easily absorbed. As a private homeowner, the cost of replacing fixtures & furnishings can very quickly drain the family budget. Increasing prices to absorb the loss is not so easy in regional areas like ours. Nor can I agree with a culture of, absorb the cost and absolve the culprit.  

I'd be happier if Airbnb operated in a similar way to Stayz. Even hotels & local real estate agents charge guests a refundable bond, which is set to cover the insurance excess in the unlikely event of an insurance claim. Or directly deduct from the bond costs associated with small damage, theft or excessive cleaning bills.

I’ve come to the conclusion that Airbnb isn't right for us, & plan to withdraw our listing once we’ve completed the last booking. Despite our decision to leave, I thought to share these experiences with the community & in doing so helped to process these thoughts & how I came to this decision. Maybe someone might find it useful.

[Lisa293]

Hi @Michela53

Airbnb was really set up for people who are sharing their homes.  These folks don't have much in the way of alternate platforms to advertise their space.  I don't think airbnb has fine tuned the entire properties with no supervision yet.  Until they change their resolution policies, there will always be a risk.  

They also seem to be creating a sub set of guests who are aware of the parameters of what they can get away with.  This is not a problem on other booking sites - I believe it is particular to airbnb partly because they are allowing it to flourish.  Something will have to be done to address this sooner or later.  

If you choose to delist and not delete the listing you can always activate it again in one click if things change.  See how it goes with the guests who are coming - you might be pleasantly suprised.  If your radar and intuition are good you should be okay.  If we weiged up all the good guests compared to the couple of bad ones, we would not hesitate to keep our listing.  You don't hear much about the good guests but there are plenty of them on the airbnb platform that are a real pleasure to host.

[Hoss0]

What is a right amount of security deposit requirement